We Discuss Why Dadi International Group Limited's (HKG:8130) CEO Compensation May Be Closely Reviewed

The results at Dadi International Group Limited (HKG:8130) have been quite disappointing recently and CEO Darren Wu bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 24 September 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Dadi International Group

Comparing Dadi International Group Limited's CEO Compensation With the industry

According to our data, Dadi International Group Limited has a market capitalization of HK$153m, and paid its CEO total annual compensation worth HK$2.6m over the year to March 2021. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at HK$1.90m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.6m. This suggests that Dadi International Group remunerates its CEO largely in line with the industry average. Moreover, Darren Wu also holds HK$1.7m worth of Dadi International Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$1.9m	HK$1.8m	73%
Other	HK$710k	HK$746k	27%
Total Compensation	HK$2.6m	HK$2.6m	100%

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Dadi International Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Dadi International Group Limited's Growth Numbers

Dadi International Group Limited has reduced its earnings per share by 31% a year over the last three years. Its revenue is down 72% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Dadi International Group Limited Been A Good Investment?

The return of -65% over three years would not have pleased Dadi International Group Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for Dadi International Group that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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